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US Dollar Looks to Fed Comments, ADP Data to Inform Policy Bets

US Dollar Looks to Fed Comments, ADP Data to Inform Policy Bets

Talking Points:

  • US Dollar looks to Fed-speak, ADP data to inform policy outlook
  • Euro will probably overlook Augusts’ flash Eurozone CPI report
  • Yen fell as Japanese stocks rose in Asia, NZ Dollar outperformed

Fed-speak continues to be in focus as the spotlight turns to commentary from Eric Rosengren, Charles Evans and Neel Kashkari, Presidents of the US central bank’s Boston, Chicago and Minneapolis branches, respectively. If their remarks fall in line with the hawkish tone on display from Chair Yellen and Vice Chair Fischer in recent days, another up-shift in the projected Fed rate hike path may offer fresh fodder continued US Dollar gains.

Augusts’ ADP Employment report is also on tap, with expectations pointing to a 175k gain in payrolls compared with 179k added in the prior month. The ADP outcome is a notoriously inconsistent indication of what may happen when official US labor-market data cross the wires but the markets may prove responsive anyway if the outcome deviates from expectations to large extent. An upside surprise will probably bode well for the greenback, and vice versa.

Flash Eurozone CPI data headlines the European data docket. The headline year-on-year inflation rate is expected to tick higher to 0.3 percent, up from 0.2 percent recorded in the prior month. The release seems unlikely to generate attention from the Euro unless a particularly dismal downside surprise stokes speculation about imminent ECB stimulus expansion.

The Yen underperformed in overnight trade as Japan’s benchmark Nikkei 225 stock index advanced, sapping demand for the anti-risk currency. The New Zealand Dollar proved strongest on the session, trading higher alongside the island nation’s government bonds. This hints the move reflected an increase in demand for NZD-denominated assets, which may speak to reach for yield and thereby imply a near-term improvement in risk appetite.

Losing money trading in the FX market? This might be why.

Asia Session

23:01GBPGfK Consumer Confidence (AUG)-7-8-12
23:01GBPLloyds Business Barometer (AUG)16-29
23:50JPYLoans & Discounts Corp (YoY) (JUL)2.25%-2.04%
23:50JPYIndustrial Production (MoM) (JUL P) 0.0%0.8%2.3%
23:50JPYIndustrial Production (YoY) (JUL P) -3.8%-3.0%-1.5%
01:00NZDANZ Activity Outlook (AUG)33.7-31.4
01:00NZDANZ Business Confidence (AUG)15.5-16
01:00AUDRBA's Debelle Gives Speech ---
01:30JPYBOJ Board Member Funo Speech ---
01:30AUDPrivate Sector Credit (MoM) (JUL)0.4%0.4%0.2%
01:30AUDPrivate Sector Credit (YoY) (JUL)6.0%6.1%6.2%
01:45CNYWestpac-MNI Consumer Sentiment (AUG)111.5-114
03:00NZDMoney Supply M3 (YoY) (JUL)6.3%-5.9%
04:00JPYVehicle Production (YoY) (JUL)-4.1%--1.0%
05:00JPYHousing Starts (YoY) (JUL)8.9%7.3%-2.5%
05:00JPYAnnualized Housing Starts (JUL)1.005m0.992m1.004m
05:00JPYConstruction Orders (YoY) (JUL)-10.9%--2.4%
05:00JPYSmall Business Confidence (AUG)46.3-47.8

European Session

06:00EURGerman Retail Sales (MoM) (JUL)0.5%-0.1%Medium
06:00EURGerman Retail Sales (YoY) (JUL)0.3%2.7%Medium
06:00CHFUBS Consumption Indicator (JUL)-1.34Low
06:00EURECB's Villeroy speaks at Frankfurt event--Low
06:00GBPNationwide House Px (MoM) (AUG)-0.2%0.5%Medium
06:00GBPNationwide House Px NSA (YoY) (AUG)4.8%5.2%Medium
07:15USDFed's Rosengren Speaks on Panel in Beijing--Medium
07:15USDFed's Evans Speaks on Panel in Beijing--Medium
07:15EURECB's Praet speaks on Panel in Beijing--Low
07:55EURGerman Unemployment Change (000's) (AUG)-4k-7kMedium
07:55EURGerman Unemployment Claims Rate SA (AUG)6.1%6.1%Medium
09:00EUREurozone Unemployment Rate (JUL)10.0%10.1%Medium
09:00EUREurozone CPI Estimate (YoY) (AUG)0.3%0.2%High
09:00EUREurozone CPI Core (YoY) (AUG A)0.9%0.9%High

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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